There’s a cartel between German car makers – and it’s pretty bad

The Spiegel, in English (link at the end of the post, via Guillaume de Calignon):

Daimler, BMW, Audi, Porsche and Volkswagen often no longer compete with one another. Instead, they secretly cooperate, very closely, in fact, in the same way one would normally expect of the subsidiaries of a single company to work together, as something like a “German Cars Inc.” — or a cartel. […]

The agreements among the German automakers likely constitute one of the biggest cartel cases in German industrial history.

And this cartel isn’t something new:

Daimler, BMW, Volkswagen, Audi and Porsche have coordinated matters relating to the development of their vehicles, costs, suppliers and markets “for many years — at least since the 1990s and to this day.”

As usual with a cartel, there’s a long list of losers:

The secret agreements are also detrimental to customers, who buy German vehicles because, among other things, they expect to be getting the best possible products from a technical standpoint. But how can a company produce the best if competition is curbed, and if the engineers stop doing their utmost to outdo the engineers working for other brands?

And then there are the millions of owners of diesel cars. In an almost bizarre way, they too are victims of the German auto cartel. For the first time, there is proof that it was agreements among these five automakers that ultimately ensured that emissions from diesel vehicles were not cleaned as effectively as would have been technically possible. This all began with the cartel of the five automakers.

Diesel buyers are now left with the damage. They face the prospect of no longer being allowed to drive their cars in cities, and of suffering significant losses when selling the vehicles. Shareholders are also among the victims. Penalties for cartel violations weaken the companies in which they hold shares and can lead to declining share prices. Suppliers are also adversely affected, as is almost always the case with cartel agreements. If the five German automakers agree to buy from only one company, others stand no chance of securing orders.

The cost of this cartel, considering how long it existed and the number of companies involved (basically, all of them), is probably extremely high. And it’ll rise even further with the fines and the damages it’ll create to the industry’s image:

The cartel of German automakers could […] face fines in the billions. And the industry’s image, which has already suffered considerably from the diesel scandal, will be damaged even further.

Now this cartel is exposed, I wonder why it have survived for such a long period. Who knew? Were some people in the government aware that things were over the legal edge with cars manufacturers? It raises real questions, and I wouldn’t be surprised to discover that the story of this cartel isn’t over…

The Cartel: Collusion Between Germany’s Biggest Carmakers – SPIEGEL ONLINE – International

The diesel scandal is not a failure on the part of individual companies, but rather the result of collusion among German automakers that lasted for years. Audi, BMW, Daimler, Volkswagen and Porsche coordinated their activities in more than a thousand meetings. The exposure of a cartel.

Source: www.spiegel.de/international/germany/the-cartel-collusion-between-germany-s-biggest-carmakers-a-1159471.html

[The Stream] Could self-driving vehicles make traffic worse?

The title of the story in this Stream (see the box below) is a bit misleading, as it’s not really about traffic but more about carbon emissions, car ownership and land use in cities.

About traffic, as self-driving cars are expected to run smoother than human-driving cars, it seems that self-driving cars will help to avoid traffic jams caused by seemingly insignificant micro events.

So thanks to those cars, the capacity of road infrastructures will increase at basically zero cost1.

Another point I want to make is about a scenario where the amount of land used by cars in cities significantly reflows, thanks to an increase in the average number of riders per car:

It’s a nice vision. But to be realized it must overcome two barriers. One is US aversion to active government. The other is an enormous amount of accrued habit and behavior on the part of affluent Westerners, particularly in the US, who are attached to the current system of private ownership and low occupancy.

The habit of being alone in our car can easily be explained by the service offered by a car: fast and “cheap” transportation with extra room for capacity. To change this habit, an alternative system would have to offer at least the same level of comfort and service, for a similar (or lower) price. Unless an offer like that appears on the market, I don’t believe this habit has the smallest chance to change.

Unless we share them, self-driving vehicles will just make traffic worse

A carbon-free, autonomous car is still a car; it still takes up space.

Source: www.vox.com/energy-and-environment/2017/5/18/15604744/self-driving-cars-cities

Improving Economics Academic Journals by Publishing Negative Results

Very interesting piece by Douglas L. Campbell on his blog about fixing academic journals. But I think there’s also another problem: negative results have a very low probability to be published.

I know this specific issue is not related to academic journals per see, as it depends more on the way researchers perceive what’s scientifically valuable in their field. But negative results should not be forgotten in the race of publishing, because a good experimental protocol or a good econometric setting that leads to a “I didn’t find what I was looking for” conclusion is a form of knowledge.

A journal of negative results has been launched in medicine. What about (and when) something similar in economics? It could help to make economics an even stronger science.

How to Cure a Cancer: Thoughts on Improving Academic Journals

So, I currently have a paper that has been under review since last December, coming up on 7 months. A friend of mine recently waited somethi…

Source: douglaslcampbell.blogspot.fr/2017/06/how-to-cure-cancer-thoughts-on.html

“France is back.” Macron’s En Marche party just swept the French parliament.

In one year, Emmanuel Macron literally blew up the whole French political establishment. The last chapter of this blow up was yesterday, when his party La République en Marche won a large majority at the National Assembly (the lower chamber of the French Parliament).

This piece by Vox is a good account of what happened, and what could happen now that Emmanuel Macron has all the powers to implement his platform.

“France is back.” Macron’s En Marche party just swept the French parliament.

A decisive majority in parliament gives Emmanuel Macron an opportunity to advance his centrist agenda.

Source: www.vox.com/world/2017/6/18/15821552/macrons-en-marche-sweeps-french-parliament

[The Stream] Grenfell Tower fire probably caused by climate change retrofitting of the building

Ryan Maue on Twitter about the Grenfell Tower fire:

Sadly, Grenfell Tower fire blamed on  “green energy” or climate change retrofitting to outside covering of building

I would rather say the fire has been caused by blind/senseless climate change retrofitting.

Grenfell Tower inferno a ‘disaster waiting to happen’ as concerns are raised for safety of other buildings

An inferno which engulfed a tower block, killing at least 12 in what could become one of the biggest fire tragedies in British history, was a “disaster waiting to happen”, experts have said.

Source: www.telegraph.co.uk/news/2017/06/14/grenfell-tower-inferno-disaster-waiting-happen-concerns-raised/